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Numbers released so far this month:
The seasonals are negative with the headline missing 69% of the time and beating 31% of the time, by 92K and 60K respective, according to BMO. However 58% of unemployment rate readings have been lower than expected with 27% matching and 15% above.
The other question is how the market will react. I tend to think that the market is still too long USD but it’s also too long Treasuries. Yield have been climbing higher and a strong number might crush the talk of 50 bps (priced at 35% now). Keep in mind, there will be one subsequent non-farm payrolls report after this one and before the Nov 7 FOMC.
Given that dynamic, I could see USD/JPY particularly strong on a strong jobs report.
A weak headline might not have as large of an effect but a rise in the unemployment rate could, even just to 4.3%.
Overall, I don’t see a big edge or skew setting up ahead of the report outside of bonds.
This article was written by Adam Button at www.forexlive.com.
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